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Ohio Utica Shale

Gastar Exploration offers update on Utica, Marcellus drilling

By Bob Downing Published: June 10, 2014

From Gastar Exploration on Monday:

HOUSTON, June 9, 2014 /PRNewswire/ -- Gastar Exploration Inc. ("Gastar") (NYSE MKT: GST) today provided an update on its Hunton Oil Play operations in the Mid-Continent as well as its Marcellus and Utica operations in Appalachia.

Mid-Continent

In our Mid-Continent Hunton Oil Play, we currently have 20 gross (10.1 net) recently drilled wells on production, of which 15 gross (7.2 net) wells are non-operated in our area of mutual interest (AMI), two gross (0.2 net) are non-operated outside our AMI, and three gross (2.7 net) are operated wells. The table following this news release includes detailed production data for each well. We intend to post this table on our website and will be updating it from time to time. Investors interested in receiving an email notice indicating that the table has been updated can register to receive alerts at http://www.gastar.com/alerts.cfm.

Non-Operated Wells

To date in the second quarter of 2014, five gross (1.7 net) non-operated wells have been placed on flowback. Production rates for these new wells have been generally strong, with one well coming on significantly above our projected type curve. The Kodiak 1-29H began flowback operations on May 4, 2014 quickly reaching an initial daily production rate of 1,666 barrels of oil equivalent (Boe) (86% crude oil) and achieved a 30-day average production rate of 1,259 Boe (83% crude oil).

The following table reflects key information on recent non-operated well activity:

                                 
                               

Approx.

       

Approx.

 

Initial

             

Gross Costs

   

Current

 

Lateral

 

Production

 

30 Day

         

to Drill &

   

Working

 

Length

 

Rates

 

Average

     

Flowback Date or

 

Complete

Well Name

 

Interest

 

(in feet)

 

BOE/d

 

% Oil

 

(Boe/d)

 

% Oil

 

Status

 

($ millions)

                                 

Jet 1-12H

 

47.4%

 

3,900

 

297

 

88%

 

111

 

94%

 

February 1, 2014

 

$6.7

Rosemary 1-3H

 

15.6%

 

3,400

 

476

 

74%

 

325

 

71%

 

February 22, 2014

 

$5.1

Jones 1-21H

 

48.4%

 

4,200

 

449

 

63%

 

250

 

70%

 

March 2, 2014

 

$5.1

Liebhart 1-31H

 

48.8%

 

4,400

 

127

 

81%

 

78

 

78%

 

March 18, 2014

 

$5.7

Coronado 1-3H

 

41.8%

 

4,300

 

224

 

80%

 

105

 

92%

 

March 19, 2014

 

$5.5

Gamebird 1-7H

 

49.3%

 

4,400

 

524

 

86%

 

446

 

87%

 

April 2, 2014

 

$5.3

Sieber 1-31H

 

34.4%

 

4,400

 

842

 

89%

 

649

 

88%

 

April 13, 2014

 

$5.1

Grizzly 1-4H

 

8.8%

 

3,600

 

387

 

65%

 

206

 

66%

 

May 1, 2014

 

$4.7

Kodiak 1-29H

 

45.3%

 

4,300

 

1,666

 

86%

 

1,259

 

83%

 

May 4, 2014

 

$5.1

Anna Lee 1-30H

 

50.0%

 

4,400

 

N/A

 

N/A

 

N/A

 

N/A

 

May 20, 2014

 

$5.2

Hobbs Ranch 1-19H

 

29.5%

 

4,400

 

N/A

 

N/A

 

N/A

 

N/A

 

WOC

 

N/A

Vaverka 1-20H

 

45.8%

 

4,200

 

N/A

 

N/A

 

N/A

 

N/A

 

Drilling

 

N/A

Jam 1-4H

 

25.0%

 

4,200

 

N/A

 

N/A

 

N/A

 

N/A

 

Drilling

 

N/A

Yeti 1-29H

 

32.0%

 

4,200

 

N/A

 

N/A

 

N/A

 

N/A

 

Drilling

 

N/A

Sasquatch 1-23H

 

43.0%

 

4,200

 

N/A

 

N/A

 

N/A

 

N/A

 

Drilling

 

N/A

 
                           
 

WOC - waiting on completion

 

Operated Wells

During the second quarter of 2014, we completed the drilling of the Easton 22-1H well, which is our first Lower Hunton (Chimney Hill) well on our recently acquired WEHLU acreage. The well was drilled to a total measured depth of 12,455 feet, including a 5,000-foot lateral. The Chimney Hill formation logs were encouraging as they showed porosity up to 10% as well as significant secondary vugular and fracture porosity. We are currently drilling the Easton 22-2H, an Upper Hunton (Bois d' Arc) well. We have completed setting the intermediate casing in the Easton 22-2H and are commencing drilling of the approximately 4,200-foot lateral section. Once drilling of the Easton 22-2H has been completed, we plan on completing the well with an open hole acid stimulation and briefly flow testing the Easton 22-2H before shutting the well in to commence completion operations on the Easton 22-1H. Completion operations on the Easton 22-1H are planned to consist of approximately 23 hydraulic fracturing stages. Both wells are scheduled to begin full flow back operations in late July 2014. We have a 98.3% working interest (80.5% net revenue interest (NRI)) in both of these wells.

J. Russell Porter, Gastar's President and CEO, commented, "As shown in the information provided herein, in the areas where we have drilled a sufficient number of Lower Hunton wells, those wells are averaging production rates, on a Boe basis, that are on par with our published Lower Hunton type curve. In addition, the percentage of oil on average is higher than our type curve. As we continue to ramp up our operated activities in the play, we expect to achieve similar results that on average will demonstrate the attractive returns that can be generated over our very large acreage position. We are also planning our initial tests later this year of the Woodford and Meramec shale formations on this same acreage position."

Appalachia

Utica

As previously reported, we commenced drilling our first Utica Shale/Point Pleasant well, the Simms U-5H, on April 3, 2014 in Marshall County, West Virginia. We are approaching total depth of 11,300 feet on the vertical pilot hole and expect to have the horizontal well completed and on production in the third quarter of 2014. Our working interest in the Simms U-5H is 50.0% (43.2% NRI). Drilling of our second Utica/Point Pleasant well is scheduled to commence late third quarter 2014 in Wetzel County, West Virginia. Our operating working interest in the first Wetzel County well will be 50.0% (41.0% NRI).

Marcellus

In Marshall County on the Armstrong and Hansen pads, we currently have 14 gross (7.0 net) Marcellus wells in various stages of drilling. We plan to complete five gross (2.5 net) wells from the Armstrong pad in the third quarter of 2014 and five gross (2.5 net) wells from the Hansen pad in the fourth quarter of 2014. We continue to delay completion of three gross (1.5 net) wells previously drilled on the Goudy pad pending resolution of the previously disclosed non-lessor surface owner dispute. In the third quarter of 2014, the rig in Marshall County will be moved south to Wetzel County to drill two Marcellus wells and a Utica/ Point Pleasant well. By year-end 2014, we expect to have 67 total gross (32.0 net) operated Marcellus wells and two gross (1.0 net) Utica/Point Pleasant wells capable of production in West Virginia.

The third-party midstream operator servicing our Appalachia production experienced another pipeline rupture in May, which has resulted in the curtailment of our gross Marcellus production by an estimated 16% over the past three weeks. As of June 5, 2014, we resumed transporting full, unrestricted production through the midstream facilities.

Second Quarter Production Guidance

The decrease in production resulting from the most recent Appalachia pipeline rupture during this quarter has been offset by higher than expected production from recently completed Hunton wells. Therefore, we are reaffirming our second quarter production guidance range of 8.4 - 8.8 thousand barrels of oil equivalent per day (MBoe/d) and we currently anticipate that actual production will be in the upper end of that range. In addition, we expect the percentage of our second quarter production attributable to liquids to be on the upper end of previous guidance range of 42 - 44% due to higher crude oil and natural gas liquids (NGLs) content in our recent Hunton completions.

About Gastar Exploration

Gastar Exploration Inc. is an independent energy company engaged in the exploration, development and production of oil, condensate, natural gas and NGLs in the United States. Gastar's principal business activities include the identification, acquisition, and subsequent exploration and development of oil and natural gas properties with an emphasis on unconventional reserves, such as shale resource plays. Gastar is currently pursuing development within the primarily oil-bearing reservoirs of the Hunton Limestone horizontal oil play in Oklahoma and the development of liquids-rich natural gas in the Marcellus Shale play and dry gas in the Utica Shale play in West Virginia. For more information, visit Gastar's website at www.gastar.com.

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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.